GAME CHANGER : GAS PRICES TO FALL DRAMATICALLY BY MID APRIL?( (Feb 27) Despite the spate of recent refinery challenges in the US, storage of oil and petroleum products is reaching the point of spilling over. The emerging thought on this glut is that it will send oil AND gasoline prices tumbling. Look to a significant fall in pump prices by mid April ? http://www.pennenergy.com/articles/pennenergy/2015/03/u-s-running-out-of-room-to-store-oil-and-gas.html?cmpid=EnlDailyPetroMarch42015

ABOUT THE DRAMATIC RISE IN GASOLINE PRICES – What happens with refineries in the US matters. Over the last 2-3 weeks several have been forced to slow gasoline production rates due to the extreme cold, unscheduled and unforeseen repairs and a labour strikes . This is happening at the exact time when refineries must change from the less expensive winter gas to more costly summer blends. Unlike oil which continues to be stockpiled, production rates and inventories for gasoline and diesel have fallen. US demand for petroleum products is rising. To make matters worse, Canadians pay for their fuel in US values. The Loonie’s recent weakness coupled with the spike in world prices for gasoline has given way to higher prices for motorists in Canada. Higher consumption taxes like the GST and HST in Canada only add to the dramatic rebound in pump prices.

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CARBON TAX ANYONE ? Let’s hope not, as it would seem some are erroneously suggesting the 6.67 cents in BC led to a decline in fuel demand. Apart from BC’s slow down in mining and forestry, the tax saw many simply drive to the US to fill up. Since 2012, BC leads Ontario in the percentage of rising demand. This article sums it up well http://business.financialpost.com/2015/01/13/terence-corcoran-no-b-c-carbon-tax-miracle-on-120th-st/

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WHY DIESEL PRICES HIGHER THAN GASOLINE (AT THIS TIME OF YEAR)

As many of your are writing in about the apparent lack of downward movement in diesel prices, its helpful to know that as colder weather approaches and just after the Fall harvest begins, diesel use soars. So does its price as diesel is almost directly related to home heating oil. As such, diesel prices fall below gas prices from April to October and then catapult above them from November to April. One observation has us scratching our heads: diesel prices in Canada tend to be 8-10 cents a litre at the rack (wholesale) than any relevant US city …..

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OIL’S COLLAPSE ISN’T ABOUT SAUDI ARABIA

While headlines and business commentators ascribe crude’s fall to the KSA’s determination to root out their upstart nemesis; US shale producers, the facts are that Saudi Arabia and OPEC have been convenient sideshows over the last decade to the real movers of fuel prices; financial speculators and index investors. Indeed up until mid October, Goldman Sachs was still betting oil higher, suggesting world supply was overestimated… only to reverse their stance and positions in holding crude futures a week later. An important footnote to this fact remains the events of June 2008 when, in the midst of the energy superbubble, prices for crude continued to escalate even after the Kingdom pumped more oil than at any time in its history.

The moral of the story ? … people who “forget history are doomed to repeat it”. In response to the causes of the Great Depression, government oversight was introduced to prevent distortions that impede the real function of commodities markets – safeguarding the role supply and demand play in price discovery between a producer and a user of a given commodity, with a party in between the two to ensure the agreed price is “hedged” or insured to protect both parties the agreed price at the time of sale and transfer of goods. Commercial banks were to be separate from investment banks and they in turn were prevented from investing, owning, or treating a given commodity as an “asset”. The larger equities and stock markets and their traders were to be segregated from buying into or permitted to trade in commodities. The 1933 Glass-Steagall Act stood the test of time until the early 2000′s when legislators were connived into allowing this important firewall’s dismantling. Despite recent attempts to reinstate the restriction (Dodd Frank) the proverbial Pandora’s box has been opened allowing commodity pricing to be gamed globally beyond one nation’s reach. They, more than OPEC, determine the price we pay for commodities…. up or down, their massive bets add significant volatility and uncertainty.

SO LETS AVOID THE OPEC BLAME GAME … the real players in crude’s fate are the ones who hold through paper 18 times the physical amount of oil available and they play commodities like stocks, not buy and sell, but buy and hold.

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As we pointed out on Canada AM a over 2 months ago, falling oil prices are good for consumers, but spell trouble for both the national finances, provincial treasuries and the bank of Canada with the risk of deflation http://www.ctvnews.ca/business/supply-glut-plunging-gas-prices-near-two-year-low-in-canada-1.2053517

FOR MORE DETAIL ABOUT THE BEST AND CHEAPEST PRICES IN YOUR CITY, WE INVITE YOU TO GO TO GASBUDDY.COM OR DOWNLOAD THE GASBUDDY APP.

THE BRIGHT LIGHTS AT THE IMF OFFER CANADA A SURE WAY TO BECOME THEIR NEXT NEEDY NATION http://www.nationalnewswatch.com/2014/07/31/imf-calls-on-canada-others-to-raise-carbon-taxes-cut-income-taxes/#.U9sV--NdXeB

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